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September 03, 2006

Fabs on hold

Businessworld has an article on how due to deays in announcement of the national semiconductor policy has caused the plans of two large chip manufacturing projects in Hyderabad - NanoTech Silicon India and SemIndia - to be placed on hold.

According to sources in the government, the ministries of finance and IT have developed differences over the sops and concessions to be offered, and Communications & IT minister Dayanidhi Maran has sought the prime minister’s intervention. However, a final decision can be taken only after the current session of Parliament.

The delay has meant that SemIndia and NTSI are unable to attain financial closure (finalising agreements with investors, partners, suppliers and customers). Quick financial closure is important, because a new fab requires quite a bit of time to start making money.

Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.